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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Financial Planning Practice | 10% | - Client engagement and data gathering - Financial plan development process |
| Topic 2: Savings Planning & Debt Management | 10% | - Debt management and repayment plans - Savings vehicles and strategies |
| Topic 3: Investment and Tax Planning | 10% | - Tax-efficient investing and income planning - Investment portfolio construction |
| Topic 4: Estate Planning | 10% | - Estate taxation and wealth transfer - Wills, trusts, and powers of attorney |
| Topic 5: Family Law | 15% | - Support obligations and asset division - Marriage, cohabitation, and separation agreements |
| Topic 6: Retirement Planning | 20% | - Retirement income needs analysis - Government and private retirement programs - Retirement savings and withdrawal strategies |
| Topic 7: Insurance Planning | 10% | - Property and liability risk management - Life, disability, and critical illness insurance |
| Topic 8: Financial Planning for Small Business | 15% | - Succession planning and exit strategies - Business structure and financial considerations |
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NEW QUESTION # 18
What is the tax treatment on disability assistance payments for Registered Disability Savings Plans?
Answer: B
NEW QUESTION # 19
George tells his financial advisor that he will need to buy a new car in two years and would like some advice on the best way to fund this goal. What consideration should his financial advisor determine first when discussing George's investment objective?
Answer: D
Explanation:
George has identified a specific short-term capital requirement: money will be needed to purchase a vehicle in two years. The first investment consideration is therefore liquidity.
Liquidity refers to the ability to convert an investment into cash quickly, predictably, and without a material loss of value. Because George needs the funds within a short and defined period, the portfolio used for this objective should not ordinarily be exposed to substantial market volatility or assets that may be difficult or costly to liquidate at the required time.
A two-year horizon materially constrains investment selection. Capital preservation and ready access to the funds become more important than pursuing aggressive long-term growth. Suitable vehicles may therefore emphasize cash equivalents, high-quality short-term fixed-income investments, or other low-volatility instruments matched to the expected purchase date.
Tax consequences remain relevant, particularly when selecting between registered and non-registered savings alternatives, but taxes should be considered after determining the fundamental time horizon and liquidity requirement. George has already stated that the vehicle is needed, so the scenario provides sufficient indication that it is a meaningful financial goal.
FPII reference/topic: Investment and Tax Planning - investment objectives; liquidity; time horizon; capital preservation; matching investments to financial goals.
NEW QUESTION # 20
If an employee earns more than the yearly maximum pensionable earnings, but an employer continues to deduct Canada Pension Plan contributions, what will happen to the excess contributions?
Answer: C
Explanation:
Where an employee has contributed more CPP than required for the year, the excess employee contribution is ultimately refunded or credited through the individual's income tax return.
CRA specifically provides for CPP overpayments to be calculated on the applicable Schedule 8 or interprovincial CPP/QPP form. The excess is reported on the individual's tax return, and CRA will either refund it or apply it against another balance owing.
An employer that discovers an over-deduction during the same year should generally correct its payroll records and reimburse the employee directly. However, where the overpayment remains on the T4 and has not been reimbursed, CRA credits the excess when the employee files the personal return.
The excess is not transferred to an RRSP, nor is it automatically carried forward against the employee's CPP obligation for the next calendar year. CPP contribution calculations operate on an annual basis.
Option A is also incorrect because repayment of the employee's own excessive CPP deduction is not a taxable employment benefit.
Accordingly, within the circumstances presented in the question, option D is the correct treatment.
FPII reference/topic: Retirement Planning - Canada Pension Plan; maximum pensionable earnings; employee contributions; CPP overpayments and refunds.
NEW QUESTION # 21
What is unique about the taxation of a partnership?
Answer: C
Explanation:
A partnership generally operates as a flow-through structure for Canadian income-tax purposes. The partnership calculates its income or loss, but the economic results are allocated among the partners. Each partner then reports the applicable share on that partner's own tax return.
CRA specifically states that a partnership generally does not itself pay income tax on its income. Instead, each partner reports his or her share of the partnership's net income or loss, whether the allocated amount was actually received in cash or merely credited to the partner's capital account.
This differs materially from a corporation, which is a separate taxpayer and pays corporate income tax before after-tax profits may subsequently be distributed to shareholders.
Option C is therefore inappropriate: the small business corporate tax rate applies to qualifying Canadian- controlled private corporations, not directly to partnership income. Option B similarly assigns a tax attribute to the partnership itself that does not describe the basic partnership taxation mechanism. Option A is not the defining feature and, in any event, taxation depends on the character of amounts allocated through the partnership.
The essential FPII principle is that partnership income and losses flow through to the partners.
FPII reference/topic: Financial Planning for Small Business - partnerships; taxation of business structures; flow-through income and losses.
NEW QUESTION # 22
Maxwell is filing a rights or things tax return for his deceased mother. She had the following sources of income:
Debenture interest coupons.
Unpaid dividends declared before her death.
Old age security that was due before her death.
Income from a registered retirement savings plan (RRSP).
Which form of income will Maxwell have to exclude from the rights or things tax return?
Answer: B
Explanation:
Income associated with the deceased person's RRSP must be excluded from the optional Return for Rights or Things.
The rights-or-things return under subsection 70(2) of the Income Tax Act allows certain income amounts that had been earned or became receivable before death, but had not actually been received, to be reported separately from the deceased person's terminal return. CRA examples include matured bond coupons, accrued bond interest, qualifying pension amounts, and dividends declared before death but unpaid at death.
CRA's longstanding treatment specifically states that an annuitant is not considered to have a "right or thing" in respect of an RRSP. Instead, the tax treatment of the RRSP on death is governed by the separate RRSP death provisions, which generally bring the fair market value into income subject to applicable rollover and refund-of-premiums rules.
The unpaid dividend declared before death is a classic example of a right or thing. Accrued debenture or bond amounts can likewise qualify, as can eligible OAS amounts payable in respect of the period before death.
Therefore, the RRSP amount is the required exclusion.
FPII reference/topic: Estate Planning - taxation at death; rights or things return; RRSP taxation on death; optional tax returns.
NEW QUESTION # 23
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